Kuala lumpur: The ringgit opened higher against the US dollar today, recovering from yesterday's sharp decline amid cautious market sentiment following the US Federal Reserve's (Fed) latest policy decision.
According to BERNAMA News Agency, at 8 am, the local currency strengthened to 4.1130/1225 against the greenback from 4.1145/1195 at Thursday's close. Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid noted that the US Dollar Index remained elevated at 100.85 points following the Federal Open Market Committee's (FOMC) decision, with investors focusing on the Fed's interest rate projections.
Dr. Mohd Afzanizam explained that the market is currently focused on the Fed staff's projections, which suggest the US central bank could raise the federal funds rate by 25 basis points later this year. Despite this, global equity markets have seen an improvement in risk appetite following reports of a peace agreement between the US and Iran, which may lead to the reopening of the Strait of Hormuz.
He added that this development might help alleviate concerns over global oil supply disruptions, potentially resulting in lower crude oil prices and more moderate inflationary pressures worldwide. This situation would indicate less pressure for central banks to tighten monetary policies, yet the absence of forward guidance in the FOMC statement has prompted the market to adopt a conservative approach.
Dr. Mohd Afzanizam highlighted that the ringgit weakened against the greenback by 1.29 percent yesterday, a depreciation deemed excessive compared to other regional currencies. He expressed optimism that the ringgit could stabilize today after experiencing such a sharp depreciation.
At the opening, the ringgit showed increased strength against a basket of major currencies. It appreciated against the Japanese yen to 2.5504/5564 from 2.5588/5620 at Thursday's close, improved versus the euro to 4.7135/7244 from 4.7222/7280, and strengthened against the British pound to 5.4304/4429 from 5.4476/4542 previously.
Against regional currencies, the ringgit traded higher across the board, except against the Philippine peso, where it remained largely unchanged at 6.79/6.81 from 6.79/6.80 at Thursday's close. The local note gained against the Thai baht to 12.5435/5801 from 12.5611/5809 at yesterday's close, rose versus the Indonesian rupiah to 231.1/231.7 from 231.2/231.5 previously, and was higher against the Singapore dollar to 3.1874/1950 from 3.1898/1939.